World News

China threatening ‘war’ in new territory as tensions with US boil over due to coronavirus

We will use your email address only for sending you newsletters. Please see our Privacy Notice for details of your data protection rights.

The coronavirus crisis will accelerate the confrontation between the world’s two largest economies with phase one of a trade deal already in jeopardy. And analysts believe the US is now trying to create an “economic NATO” to contain China post-coronavirus speding ambitions.

I think the real tension oncoming is not just trade wars but capital wars — we’re in a world where capital wars matter

Michael Howell

Michael Howell, CEO of Crossborder Capital, told CNBC he was convinced a new battleground surrounding investing capital could now open up.

He said: “I think the real tension oncoming is not just trade wars but capital wars — we’re in a world where capital wars matter.

“There is an awful lot of liquidity being poured into markets amid the coronavirus crisis.”

Governments and central banks have scrambled to provide stimulus packages in an effort to soften the economic blows caused by the pandemic, with Donald Trump leading the way with an historic $2 trillion coronavirus relief bill i the US.

Global demand for the dollar has soared with the currency seen as a safe haven in times of crisis.

The US Federal Reserve introduced facilities enabling institutions in Australia, South Korea and Brazil to access dollar funding, leading to shortages and impacting on other currencies.

Mr Howell said he believed US policymakers had ulterior motives for making their currency more internationally accessible.

He said: “The decision to share dollar swap lines with 14 other nations, effectively forming a de facto group of 15 countries, including America, that have access to dollars, that is a critical development.”

He called the move the “economic equivalent of NATO,” which he noted was established to contain the Soviet Union militarily.

He said: “This is trying to contain China economically. There will be further salvos fired in this capital war, this technology war, this trade war.

“Essentially, America and China are clear rivals and the coronavirus crisis has simply accelerated these trends.”

US hedge fund magnate Ray Dalio predicted back in November that capital wars would mark the next stage in the economic conflict between the US and China when he warned the power struggle would descend into a fight over the dollar’s long-held place as world’s preferred form of exchange.

Agathe Demarais of The Economist Intelligence Unit (EIU) said pre-existing geopolitical tensions would be accelerated by the pandemic.

She said: “The coronavirus epidemic is not going to change the ongoing fragmentation, the ongoing polarization of the geopolitical picture.

India v China border: Why are India and China in row over border?[ANALYSIS]
China plot: Details emerge of Beijing’s chilling new plan[FOCUS]
China’s is preparing for war – Xi Jinping in terrifying alert [SPOTLIGHT]

“But we think it’s going to accelerate ongoing processes of countries such as Russia and China seeking to play a bigger role in the global stage and to reassert their position on the global stage.”

Mr Trump has openly blamed China for the pandemic and threatened new sanctions on the country in retaliation.

US officials have also been critical of Beijing’s draft national security law for Hong Kong, with some threatening sanctions over the legislation which is accused of being used to destabilize the territory’s freedom.

Source: Read Full Article